What does the future of the supply chain management look like?

By Lightwell | Thu, Aug 01, 2013

Making assumptions about the future can be risky for a business, but at least considering which trends and technologies will add value down the road has become a necessity. Where as an incorrect assumption can result in wasted investment, early adopters can work out the kinks of implementation faster and benefit from more mature strategies than those that deploy solutions later.

From an ever-expanding network of partners to heightened customer expectations, there are many pressure points emerging from the supply chain. The difficulty is in identifying which issues are likely to be prominent concerns for the long-term and which technology solutions will be key to solving those problems. Writing for Supply Chain Digital, INFORM Software Director Karsten Horn recently outlined several prominent trends.

Increased globalization Most business decision makers are likely aware of some of the pressures created by globalization. However, the surprising element may be the rate at which levels of interconnectedness increase. As Karsten noted, the proliferation of services such as social media has made it easier for different business cultures and values to come together even in non-professional environments.

This could be a double-edged sword, however. With so many moving parts and so many different people managing them, it's easy for miscommunication to get in the way of efficiency. As a result, organizations will need to continue investing in supply chain management software that not only keeps track of supply chain data, but makes it accessible to all stakeholders within an organization's network.

The cloudWhile not the best fit for every operation, the cloud is a prominent force in nearly every sector. Initiatives such as the U.S. government's Cloud First program push the envelope further by encouraging agencies to consider these solutions before focusing on alternatives. The cloud's value in supply chain management comes in the form of access. Because data is stored within third-party infrastructure, employees can access and manage information from any device.

Scalability is another key advantage here. With the ability to provision IT resources from any department , organizations can quickly add customer and partner profiles and their associated data without making large investments in IT infrastructure.

"This, alongside reduced operating costs and increased availability of important data across the entire business, could mean companies who do not embrace this technology are at risk of falling behind their competitors," Karsten wrote.

Despite the cloud's momentum and industry observers making it sound like a necessity, it is important to keep in mind that each organization will likely have varying levels of cloud readiness. Incorporating the cloud into IT environments that consist of largely of legacy software, for instance, is a more complicated task than moving applications and data that are relatively modern. This should not keep businesses entirely out of the cloud, but it does mean that decision makers should assess their organization's available skill sets before setting their supply chains down that path.

Multi-faceted IT strategies The final main point that Karsten made is particularly important when considering the number of different options available. Because it is unlikely that a single approach would account for all the intricacies of today's supply chain, conventional strategies may fall short. A multi-faceted approach requires businesses to consider how each part of the supply chain affects the other and how changes in one area could translate to efficiency elsewhere.

For example, improving the organization's ability to predict demand and protect its inventory would reduce the need to purchase safety stock. As Karsten noted, this translates to freed up cash flow that could be invested new technology such as a better warehouse management system to further increase efficiency.

The supply chain of the future All of this may sound a lot like supply chains now, but these trends are likely to become more pronounced in the coming years. Ultimately, this means that success will become even more dependent on successful B2B integration to ensure that partners' processes are aligned.

The problem is that many organizations currently lack solutions to provide this level of collaboration and complete visibility over their supply chains. A recent Manufacturing.net article explored the issue more in depth, highlighting data from a survey of 355 C-level executives.The first problem is that a significant number (44 percent) of respondents used inefficient supply chain management solutions such as fax or email. This limits the ability to respond to change quickly.

The second issue is that businesses are not overseeing the entirety of their supply chains. For example 49 percent of global manufacturing executives said they only have visibility of their Tier 1 suppliers.

As more business leaders recognize these problems, it is likely that supply chain management will need to evolve to accommodate increasing demand for efficiency and effectiveness. The tools that orchestrate these transformations will be those that can connect fragmented processes so that organizations can connect in a unified and strategic way.

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